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Stocks unsettled by war, energy bans, EU bond purchase possibility

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SPI futures are indicating a flat start to the trading day in Australia and the S&P/NZX 50 is up 0.5% in the first hour. New Zealand banks posted record profits last year stoked by a housing boom and the robust economic response to the Covid-19 pandemic, according to an annual survey. Net income across the industry rose 48% to NZ$6.13 billion in 2021, KPMG said in its Financial Institutions Performance Survey released on Wednesday in Wellington.

Asia markets are set to remain unsettled. US President Joe Biden announced a ban on imported oil and other energy sources from Russia to punish the country for its invasion of Ukraine, which drove US gasoline prices to record levels, adding pressure on the economic recovery. US inflation is being tipped to hit 8% in data being released on Thursday, an acceleration from the prior month.

US and EU stocks

US stocks closed a choppy session lower on Tuesday, with the Russian invasion of Ukraine and consequent rise in commodity prices fuelling concerns of slower global economic growth. The Dow Jones Industrial Average closed 185 points lower at 32,632, while the S&P 500 and the tech-heavy Nasdaq fell 0.7% and 0.3%, respectively.

Europe’s major stock indices swung between gains and losses to end mixed, with the DAX and the FTSE 100 finishing flat, while the CAC 40 and the Stoxx 600 edged down 0.3% and 0.4%, each, as embargos on Russia energy goods, massive spending plans in the EU and the ongoing war in Ukraine drove sentiment.

Treasuries

The European Union may jointly issue bonds to finance energy and defence spending. Leaders gather on Thursday for a 2-day summit where the proposal is expected to be discussed. The spread between the German and Italian debt tightened on the news and the euro extended gains. US 10-year yield jumped along with its German counterpart.

Commodities

Gold touched US$2066 an ounce, heading closer to its highest level since August 2020.

WTI crude futures surged as much as 8% to almost US$130 a barrel before paring some gains after US President Biden announced a ban on the imports of Russian oil, gas, and energy into the US as part of economic penalties for Russia’s invasion of Ukraine. The UK pledged to phase out the import of Russian oil and oil products by the end of 2022. Brent is at US$131 a barrel.

Cryptocurrencies

Bitcoin was trading at US$38,500 while Ethereum was at US$2558.


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